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QUESTION:
As it seems impossible to get a mortgage for a rental property with less
than 25% down, we are considering purchasing the property as our =
residence
first, obtaining a 5% mortgage on that basis, and then renting it out =
later.
Does this course of action have adverse tax consequences?
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david ingram replies:
Tens of thousands of people have done just that when they have bought a =
house with little down and then being forced to move because of job =
transfer, divorce or other special circumstances. =20
And likely tens of thousands of people have tried to make it look like =
they were going to move into a house to get a high ratio mortgage and =
then have rented the property out. Others (in the states and Canada) =
have used RRSP or IRA funds to buy their homes and then moved out and =
rented them out.
It is hard to prove that your intent was not legitimate but I have to =
advise you that "IF" something goes wrong and you default and the =
mortgage company finds that you never intended to live in the house, =
there is a chance that you could be charged with obtaining money under =
false pretences. do I know anyone who has been charged? NO! But the =
possibility exists and you might want to obtain some good legal advice =
before you get a mortgage under these circumstances.
Your question is Canadian Specific but you have an Australian email =
address.
Hope this helps you in your decision.
Oh, by the way, there are no adverse tax consequences.
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
Bus (604) 980-0321=20
[email protected]
www.centa.com www.david-ingram.com
Disclaimer: This question has been answered without detailed =
information or consultation and is to be regarded only as general =
comment. Nothing in this message is or should be construed as advice =
in any particular circumstances. No contract exists between the reader & =
the author and any and all non-contractual duties are expressly denied. =
All readers should obtain formal advice from a competent financial, or =
real estate planner or advisor & appropriately qualified legal =
practitioner, tax or immigration specialist in connection with personal =
or business affairs such as at www.centa.com. If you forward this =
message, this disclaimer must be included."
This from "ask an income tax and immigration and bankruptcy expert" from =
www.centa.com or www.jurock.com or www.featureweb.com. Canadian David =
Ingram deals daily with tax returns dealing with expatriate:
multi jurisdictional cross and trans border expatriate problems for the =
United States, Canada, Mexico, Great Britain, the United Kingdom, =
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Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, American and =
Canadian and Mexican and any of the 43 states with state tax returns, =
etc.
income tax wizard wizzard guru advisor specialist consultant taxman =
Alaska, Alabama, Arkansas, Arizona, California, Colorado, =
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Taxman and Tax Guru and wizzard wizardYour name has been added to our =
email list because of an enquiry we have received, we may not answer =
your question but=20
another similar question will be as we lump them.
You may find more answers at www.centa.com
David Ingram of the CEN-TA REALTY Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 980-0321 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
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